The federal budget unveiled in Ottawa on Tuesday would give small businesses a balanced government budget down the road, but not the corporate tax cuts they seek.

The Conservative plan promises no new taxes for business and a continued freeze on Employment Insurance premium rates, but it does not offer any initiatives to spur productivity or competitiveness, as some observers hoped.

“Further tax relief for small business will be a priority for the government following the return to balanced budgets,” the budget stated. “This government is firmly committed to delivering both lower taxes and less red tape.”

Deloitte was among those observers that hoped to see tax credits or other measures to spur innovation and productivity.

“They’re trying to balance the budget,” said Albert Baker, partner, global tax policy leader at Deloitte. “Hopefully these are elements that we will see in the future.”

The budget does propose to provide an additional $500 million over two years to the Automotive Innovation Fund to support new strategic research and development projects. It also plans to move forward with planning and construction on a new Windsor-Detroit International Crossing.

The “federal budget gets a bronze from small business,” the Canadian Federation of Independent Business said in a release.

The group welcomed Ottawa’s efforts to cut the deficit and the freeze on EI premiums, but was disappointed by the elimination of the EI hiring credit for small business. The credit, created in 2011 and extended through 2013, provided small business owners with a tax credit worth up to $1,000 on any increase in the employer’s share of EI premiums. It was intended to boost hiring.

“We urge government to move quickly to reduce EI premiums as soon as the account is back in balance,” CFIB president Dan Kelly said in a release.

The CFIB had been looking for a gradual reduction in the small business tax rate to 9 per cent from the current 11 per cent, starting with a half-point reduction in 2014.

The budget would revise the thresholds for when companies have to make remittances to the government, resulting in fewer payments each year.

Throughout the year, employers are required to withhold federal and provincial taxes, as well as Employment Insurance and Canada Pension Plan contributions, from their employees’ paycheques. They remit these payments to the government along with the employer portions weekly, monthly or quarterly depending on their size.

The rules can be onerous for companies that are required to make remittances frequently, the government said.

Employers with $15,000 in remittances are currently required to send them to the government up to two times per month. The budget would raise that threshold to $25,000.

As well, the current $50,000 threshold for employers required to remit up to four times per month would be doubled to $100,000.

The proposed changes would mean that over 50,000 small- and medium-sized employers will see their maximum number of required payments on account of source deductions cut in half.

“It sounds fairly significant,” said Bruce Ball, spokesperson for the Chartered Professional Accountants of Canada, also known as CPA Canada. “These rules haven’t changed for a very long time.”

The budget would also freeze the EI premium rate at the 2013 level of $1.88 per $100 of insurable earnings.

The federal government now expects a surplus of $6.4 billion in 2015-16. That figure includes a $3 billion cushion, or annual adjustment for risk as it’s called in the budget.

It’s also higher than the projected $3.7 billion surplus forecast in the Fiscal Update released in November.

“The numbers came in a bit higher than expected,” said Derek Burleton, deputy chief economist at TD Bank Group.

“I think some of the initiatives they announced (Tuesday) managed to pull it up a little higher. A lot of those initiatives are focused on generating tax savings and closing tax loopholes. There is not a lot of spending in there.”

The deficit has been reduced by almost two-thirds since the height of the global economic financial crisis.

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